Correlation Between Mesirow Financial and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Metropolitan West at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mesirow Financial and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial High and Metropolitan West High, you can compare the effects of market volatilities on Mesirow Financial and Metropolitan West and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mesirow Financial with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Metropolitan West.
Diversification Opportunities for Mesirow Financial and Metropolitan West
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesirow and Metropolitan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial High and Metropolitan West High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West High and Mesirow Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mesirow Financial High are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West High has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Metropolitan West go up and down completely randomly.
Pair Corralation between Mesirow Financial and Metropolitan West
Assuming the 90 days horizon Mesirow Financial High is expected to generate 0.79 times more return on investment than Metropolitan West. However, Mesirow Financial High is 1.27 times less risky than Metropolitan West. It trades about 0.41 of its potential returns per unit of risk. Metropolitan West High is currently generating about 0.21 per unit of risk. If you would invest 847.00 in Mesirow Financial High on October 26, 2024 and sell it today you would earn a total of 10.00 from holding Mesirow Financial High or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial High vs. Metropolitan West High
Performance |
| Timeline |
| Mesirow Financial High |
| Metropolitan West High |
Mesirow Financial and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Metropolitan West
The main advantage of trading using opposite Mesirow Financial and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Metropolitan West can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Mesirow Financial vs. Elfun Government Money | Mesirow Financial vs. Aig Government Money | Mesirow Financial vs. Franklin Adjustable Government | Mesirow Financial vs. Ridgeworth Seix Government |
| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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